SABMiller’s cassava beer plans mature

SABMiller’s pioneering cassava beer – aimed an entire new market of drinkers in Africa – has been delayed by nearly a year following a number of setbacks. The UK-listed brewer, like many food and beverage companies, is seeking to localise sourcing – in this case, switching barley for domestically grown cassava in Africa – in an attempt to secure supplies and cut costs. Additionally, SABMiller hopes that having a cheaper beer will allow it to tap the vast swaths of drinkers who now stick to home brew. But the obstacles proved bigger than the brewer envisaged. The beer is now expected to go on sale in Mozambique in six to nine months’ time, nearly a year after the initial launch plans for late 2010. Assuming this is successful, the beer will then be rolled out to other parts of the continent. “Where we are and what we have achieved in the timing we have set, we have done quite well,” said Gerry van den Houten, technical, supply chain and enterprise development director at SABMiller’s African operations. “But if we could have done it six months earlier, that would have been great.” The original plan was to brew the cassava beer in Angola, and the group built a state-of-the-art brewery just outside the capital Luanda. The setbacks ranged from political and financial – when oil prices fell in late 2009, the crunch on foreign exchange meant SABMiller could not get enough to pay suppliers – to technical issues. The squeeze on foreign exchange prompted SABMiller to move the pilot project from Angola to Mozambique, where it has succeeded in winning concessions on excise tax: the cassava beer will pay just one-quarter of the duty payable on mainstream beer. That, in turn, means SABMiller can sell its beer at 65 to 70 per cent of the price of mainstream beer, a level at which it aims to bring in a whole new set of drinkers. It believes the brand could account for about one-fifth of its portfolio in the region. Mr Van den Houten said the company was now “90 per cent there” in terms of processing technology after several headaches along the way. Cassava is largely made up of water, making it heavy and expensive to transport, and also suffers from a short shelf life once harvested. The brewer has got around this by developing mobile processing units capable of squeezing out the water and bringing the plant to a stable (and lighter) state ready to be transported to the mill. Despite the travails, Mr Van den Houten is confident localising the supply chain will prove beneficial. “It has cost advantages, shortens the supply chain and gives us an opportunity to get involved in local entrepreneur initiatives and job creation,” he said. SABMiller now imports some 80 per cent of its raw materials, including packaging, mainly from Europe and South Africa. Cassava is Africa’s largest crop in terms of tonnage, but is very much a subsistence crop according to Mr Van den Houten. Depending on how much drinkers take to the new brew, he reckons the company could take crops from 2,000 smallholder farmers in Mozambique.